Souring Chinese Consumers Weigh on Alibaba Shares

There’s been no shortage of commentary on the recent initial public offering (IPO) of Alibaba (BABA) shares. During the last week or so, I’ve fielded questions from a number of people, including students that attend the graduate finance classes I am teaching this semester at the New Jersey City University (NJCU) School of Business, as to my thoughts on the pricing of that offering.

There is no doubt the Alibaba IPO was a hot transaction — not only was it the largest-ever IPO, but the shares quickly catapulted up to close their first day of trading at $93.89, a 38% gain from the company’s offer price of $68 per share. If you were an investor that received stock on the IPO transaction and cashed out during that first day of trading, you would have booked a quick and significant profit.

The vast majority of investors did not have such luck, and that raises the question as to whether or not Alibaba shares are a good buy even after their more-than-7% pullback during the last few days.

Read more about Alibaba’s initial public offering and its effects on the market at Eagle Daily Investor.